JUSTICE DEPARTMENT FILES SUIT TO COLLECT EMPLOYMENT TAXES
THAT EMPLOYER REFUSED TO WITHHOLD

WASHINGTON D.C. - The Department of Justice filed a lawsuit in federal court today in Sacramento, California to collect more than $500,000 in unpaid employment taxes, penalties and interest from a Redding, California employer who has openly refused to withhold federal taxes from his employees’ wages.

Walter Allen “Al” Thompson is the employer named in the complaint. The complaint alleges that he does business as Cencal Aviation Products, which makes jackets, flight bags, and other accessories for private pilots. Thompson has been described by the New York Times as an “advocate of the notion that American companies and their workers do not have to pay income taxes.” Thompson appeared on the television program “60 Minutes II,” where he asserted that wages are not taxable and that employers therefore need not withhold federal taxes from their employees’ wages.

The government’s complaint seeks a ruling that Thompson personally owes more than $500,000 in employment taxes, penalties, and interest. The complaint also seeks a ruling that Thompson and his spouse owe $27,721 in federal income taxes, penalties, and interest that they have refused to pay, and requests that the court order the foreclosure of the Thompsons’ residence, with the net proceeds of the sale being used to help pay their tax debts.

“All employers must comply with federal employment tax laws,” stated Eileen J. O’Connor, Assistant Attorney General for the Tax Division. “When employers violate employment tax laws, they harm not only their employees, but the public as a whole.”

The unfounded contention that employers do not have to withhold federal income tax or other employment taxes from wages paid to employees is on the IRS's list of the Dirty Dozen tax frauds for 2004, which is available at http://www.irs.gov/newsroom/article/0,,id=120803,00.html. Information about the Tax Division is available at http://www.usdoj.gov/tax/index.html.

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